Despite remaining above year-ago levels, take-home pay declined marginally in August 2026 as salary earners continued to feel the effects of the challenging economic environment.
Higher inflation and interest rates continue to erode purchasing power and confidence, while renewed Middle East tensions are expected to add further pressure in the months ahead.
This is according to the PayInc Net Salary Index for August 2026, which tracks the average nominal net salaries of approximately 2,1-million salary earners in South Africa.
“The average nominal net salary declined marginally to R21 622 in August, 0,1% lower than in July, but 1,9% higher than a year ago,” says Shergeran Naidoo, head of stakeholder engagement at PayInc.
The year-to-date average nominal net salaries are up 1,6% compared with the 3.7% increase recorded for the full year in 2025.
The challenging economic year has translated into a difficult year for salary earners, which has become evident in the PayInc Net Salary Index.
“After increasing in July for the first time in nine months, the index declined by 0,5% in real terms. At R20 164 in August, the real index was 2,6% below year ago levels, while year-to-date data shows that net salaries are on average down by 2,1% in real terms,” says Elize Kruger, independent economist at PayInc. “For households, this erodes purchasing power, discretionary spending and confidence.”
While consumer inflation moderated to 4.3% and 4.4% in July and August respectively, the renewed conflict in the Middle East is expected to push headline inflation above 5% in October and keep it elevated for several months, adding further pressure to household budgets.
“This expected upward trend and the risk of rising inflation expectations have triggered another interest rate hike. The benchmark interest rate is now 50bps higher so far in 2026, adding further strain on salary earners’ budgets,” says Kruger.
Salaries differ across sectors
While the labour market remains strained, notable differences in earnings persist across sectors. According to the latest Quarterly Employment Statistics, average monthly gross earnings in the non-agricultural formal sector stood at R32 828 in the first half of 2026.
Earnings in wholesale and retail trade, construction and manufacturing were below the economy-wide average, while most other sectors recorded average monthly earnings of between R37 107 in transport and communication and R39 492 in community, social and personal services.
The electricity, gas and water supply sector remains a notable outlier, with average monthly gross earnings of R62 454. Salary increases in the sector have also been among the highest. At Eskom, for example, an average increase of 7% was implemented in October 2025, comprising a 3% guaranteed cost-of-living adjustment and a discretionary component aimed at rewarding and retaining top performers and addressing income disparities.
Stats SA reported average gross earnings growth of 5,3% in the first half of 2026 compared with the same period in 2025. However, growth varied significantly across sectors, from just 3,5% in financial services to 9.0% in electricity and water.
Year-to-date trends from the PayInc Net Salary Index, which provides a broader view beyond the formal sector, point to a challenging year for salary earners. Nominal net salary growth is likely to remain below 2025 levels, while higher inflation continues to erode purchasing power.
“The sector differences show that salary earners are experiencing the current economic environment very differently,” says Kruger. “But the broader PayInc Net Salary Index points to continued pressure, with rising inflation likely to delay a recovery in real purchasing power.”